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Hyatt Banks on Africa Tourism, Plans to Open 9 Hotels by 2020

Hyatt Banks on Africa Tourism, Plans to Open 9 Hotels by 2020

Hyatt (H) increases its focus on the African market as favorable business environment and robust tourism spending therein are attracting hotel companies to the continent.

Hyatt Hotels Corporation H has announced its plan to expand footprint in Africa by adding nine hotels therein. Backed by such strategic endeavors, the company intends to double the hotel count by 2020-end. Hyatt will also open hotels in Algeria, Ethiopia, Kenya, Senegal, Egypt, Tanzania and Morocco.

Apart from expanding its presence domestically, the company is consistently trying to strengthen its foothold worldwide and capitalize on demand for hotels in international markets.

African Market: A Major Growth Driver

Favorable business environment and robust tourism spending are attracting hotel companies to Africa, mostly East Africa. Hassle-free visa rules and travel incentives therein have also managed to draw attention from the tourists. Per UNWTO Tourism Highlights: 2018 Edition, international tourist arrival in sub-Saharan Africa has outpaced the global average growth. From 2005 to 2017, sub-Saharan Africa has witnessed international tourist growth of 5.8% compared with the global average increase of 4.2%.

Expansion in these lucrative markets should help the company gain market share in the hospitality industry, thereby providing an impetus to its business. Additionally, Hyatt aims to differentiate its brands by providing a distinct experience for different travelers. It further intends to continue gaining global market traction on its solid brand portfolio, and innovative and exceptional personalized service to guests.

In October 2017, management stated that Hyatt will invest an estimated $200 million for opening hotels in Africa. Despite plans to double its presence therein, Hyatt still lags behind its competitors like Radisson and AccorHotels. While AccorHotel operates more than 100 hotels in Africa, Radisson has 86 hotels in the continent.

Price Performance

In a year’s time, shares of Hyatt have rallied 28% against the industry’s 1% decline. Stocks like Extended Stay America, Inc. STAY, Marriott International, Inc. MAR and Hilton Worldwide Holdings Inc. HLT, which belong to the same industry, have also gained 1.4%, 19.1% and 16.3%, respectively, in the same period.

Hyatt has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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